Genaro Mendoza

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
GENARO MENDOZA, 	No. 09-11678
Debtor(s).
______________________________________/
Further Memorandum on Objection to Claim
_________________
Chapter 11 debtor in possession Genaro Mendoza originally objected to Claim #19 filed by
U.S. Bank on grounds that it included a prepayment premium and default interest. The Bank conceded
that the objection on these grounds should be sustained unless the order confirming Mendoza’s plan,
now under appeal, is reversed or vacated, as that order has not been stayed.1
In the meantime, the Bank discovered an error in its claim resulting in understatement of the
outstanding principal balance of about $600,000.00. The court rejected Mendoza’s claims of prejudice
and allowed the Bank to amend it claim.
The remaining issue regards postpetition attorneys’ fees and expenses which the Bank seeks to
add it its claim pursuant to § 506(b). These fees amount to $207,965.89, of which $129,957.87 was
incurred after the effective date of the plan.2
The court notes that overall fees of about $200,000.00 are not per se unreasonable in relation to
1It appears that Mendoza has prevailed on the Bank’s appeal to the District Court. The Bank
says it intends further appeal.
2According to the docket, the court is today ruling on the Bank’s motion for “reconsideration”
of a memorandum the court issued on December 5, 2010, expressing frustration with the procedural
posture of the objection. However, a memorandum is not an order so there is no ruling to be
reconsidered. The court is merely completing its rulings on Mendoza’s objection to the Bank’s claim.
1
Entered on Docket
March 14, 2011
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-11678 Doc# 330 Filed: 03/14/11 Entered: 03/14/11 14:47:32 Page 1 of
2

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
a loan of $4.5 million. The court further finds unpersuasive Mendoza’s objection to the time spent
preparing for the second confirmation hearing (the Bank’s counsel having missed the first hearing due
to his mistake) and finds Mendoza’s objection relating to preparation of the erroneous claim to be de
minumus as well as unpersuasive.
However, Mendoza is correct in pointing out that after a plan is confirmed, the Bank is only
entitled to further fees if it is the prevailing party under state law. In re Hoopai, 581 F.3d 1090, 1101
(9th Cir. 2009). The Bank’s only response to this objection is to argue that the parties had stipulated
that there would be no further pleadings considered on the objection to its claim. While the court is
happy to give effect to a stipulation as to what evidence it may consider, the court declines to allow the
parties to limit what law the court may consider. There is a Court of Appeals decision governing this
issue which the court will follow regardless of any stipulation which may be interpreted as requiring
the court to disregard it.
For the following reasons, Mendoza’s objections to the Bank’s claim will be overruled except
as to the sum of $129,957.87, which will be disallowed without prejudice to recovery if the Bank is a
prevailing party. Counsel for Mendoza shall submit an appropriate form of order which counsel for
the Bank has approved as to form.
Dated: March 14, 2011
SAlan Jaroslovsky
U.S. Bankruptcy Judge
2
Case: 09-11678 Doc# 330 Filed: 03/14/11 Entered: 03/14/11 14:47:32 Page 2 of
2